Investment Outlook Q3 2017

Notz Stucki has just released its investment outlook for the third quarter of 2017.

“The reduction of interest rates below their natural levels has poisoned the river at its source, and nobody knows whether the water is fit to drink.” Jonathan Ruffer

The markets performed well in the second quarter propelled by the reassuring election result in France which drew a line under the populist victories in the major elections last year.

Emmanuel Macron, 25th President of the French Republic

As the year has progressed the shocks of Brexit and the Trump victory have been digested, and there is more clarity on what they may signify. Ironically after four decades of being a difficult member of the EU Britain may become a better European state when it leaves, being forced to accept compromises. The Brexit negotiations are likely to offer more noise than light in the next year, the process has been likened to negotiating a divorce with 27 spouses simultaneously, but despite the nationalist rhetoric both sides are incentivised to come to a sensible agreement, and Mrs May’s disastrous election campaign has weakened the hand of the hard Brexit camp. Meanwhile the more one watches the Trump administration the more it seems that the Barbarians are in the Castle. Mr Trump’s unpredictability and lack of Washington experience has affected his ability to push his reforms through. Thus far the anglo-saxon world has seemed powerless to translate the visceral voter anger into legislation.

As politics becomes less of a concern investors can worry again about QE-fattened markets…